Cheung Kong's No 2 man is set to testify today in defence of an HK$23 million claim by the Urban Renewal Authority over their joint venture to build The Center, but he has already been cited calling it a "bad deal" before he even takes the stand.

The revelation on Victor Li Tzar-kuoi's opinion of the 1989 joint venture came from the testimony of Abraham Razack, former chief executive of the Land Development Corporation, URA's predecessor.

The URA is suing Cheung Kong and its subsidiary Agrila for HK$23 million in outstanding payment over the purchase of the land on which The Center, a 346-metre steel skyscraper in Central, was built.

Razack was testifying in the High Court yesterday for Cheung Kong rather than his former employer LDC. The real estate and construction lawmaker skipped the Legislative Council's policy address Q&A session to attend the court proceedings.

Li made the "bad deal" comment during the 1997 financial crisis when the Hong Kong property market was badly hit, Razack said, but it was a good deal for LDC because it was guaranteed HK$1.9 billion in profits.

"The whole market went down to the extent that we felt very lucky to be isolated in the financial crisis," Razack said.

In question is whether - as contended by Cheung Kong - there was a meeting in May 2000 between Li, Razack and URA's former chairman Lau Wah-sum in which an agreement was struck for the developer to be released from further payment after paying out the guaranteed HK$1.9 billion profit.

Razack said that in 2000, after Cheung Kong missed the March 31 payment deadline, the LDC board decided in a May 27 meeting to set an ultimatum for the developer to make the payment by May 31, 5pm.

On May 27 after the meeting, Razack said, he and Lau went to Li's office to convey LDC's decision. "Victor was not happy … But he accepted that this was full and final payment, and we had no more outstanding payment between us," he said.

Under the agreement, Razack said, Cheung Kong had to pay HK$1.05 billion - the unpaid balance of the guaranteed profit at that time - but the two months' interest for the developer's late payment was waived.

If there were outstanding sums other than the guaranteed profit, they should have been drawn to both LDC and Cheung Kong's attention, he said.

This article appeared in the South China Morning Post print edition as 'Joint venture was bad deal for Cheung Kong'